Quarterly report pursuant to Section 13 or 15(d)

Loan Payable

Loan Payable
6 Months Ended
Jan. 31, 2020
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]

Note 7 - Loan Payable

In connection with the purchase of our new facility, on November 27, 2018, a wholly-owned subsidiary (the ““mortgagor subsidiary”) of the Company entered into a Fee Mortgage and Security Agreement (the “mortgage agreement”) with Citibank, N.A. (the “mortgagee”). The mortgage agreement provides for a loan of $4.5 million for a term of 10 years, bears a fixed interest rate of 5.09% per annum and requires monthly mortgage payments of principal and interest of $30. Debt issuance costs of $72 are being amortized over the life of the mortgage agreement. The balance of unamortized debt issuance cost was $64 at January 31, 2020. At January 31, 2020, the balance owed by the subsidiary under the mortgage agreement was $4.3 million. The Company’s obligations under the mortgage agreement are secured by the new facility and by a $750 cash collateral deposit with the mortgagee as additional security. This restricted cash is included in other assets as of January 31, 2020.

The mortgage agreement includes affirmative and negative covenants and events of default, as defined. Events of default include non-payment of principal and interest on debt outstanding, non-performance of covenants, material changes in business, breach of representations, bankruptcy or insolvency, and changes in control. The mortgage includes certain financial covenants. As of January 31, 2020, required financial covenants have been met.

We assumed from the seller an operating lease for a current tenant at the facility which may be extended to June 30, 2020. Rental income from the assumed lease is included in other income.

Minimum future annual principal payments under the mortgage agreement as of January 31, 2020, are as follows:

  July 31,          
  2020     $ 70    
  2021       144    
  2022       152    
  2023       160    
  2024       167    
  Thereafter       3,649    
        $ 4,342    
  Less: Current portion       (140 )  
  Unamortized mortgage cost       (64 )  
          $ 4,138